Blackberry maker RIM sees shares tumble as company ‘faces challenges’

Blackberry maker Research In Motion could see its share price drop even further after it reached a nine-year low, analysts have said.

Research In Motion CEO Thorsten Heins speaks at the BlackBerry World in May (Picture: REUTERS)

The Canadian technology company slumped after a downgrade by investment bank Morgan Stanley, which said RIM faced major challenges.

Shares dropped to about £5.77 – their lowest level since 2003 – before they closed at about £5.84 on Monday. They have lost 94 per cent of their value since they peaked in 2008.

But Morgan Stanley’s Ehud Gelblum predicted the shares would decline to about £4.49 because RIM faced a ‘triple whammy’ this quarter.

The Ontario-based company has suffered falling sales in the face of competition from Apple’s iPhone, while growth in the smartphone market is slowing, he added. Mr Gelblum also said he expected the BlackBerry 10 software to be a failure, leading to a more rapid decline in sales than other analysts have projected.

He predicted RIM would have £4.49billion in sales in the next fiscal year but analysts, polled by FactSet, expect it to make about £7.69billion.

RIM’s true value is in the sum-of-the-parts valuation because the company is not winding down and selling off its parts, he said. This is because RIM makes money from operating the BlackBerry email system and sits on patents potentially worth billions.

However, Goldman Sachs analyst Simona Jankowski, who gave the company a ‘neutral’ rating and an £8.33 price target, said RIM’s earnings were likely to drop significantly, but this would partly be counteracted by cuts in operating expenses.